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Eric Hirshberg was an experiment when Activision Blizzard‘s chief executive hired Hirshberg as CEO of the Activision Publishing division about 18 months ago. Hirshberg was an art-school graduate who rose through the ranks of the creative side of advertising and eventually became CEO of billion-dollar ad agency Deutsch LA. Most video game CEOs rise through the ranks of finance or game development. But Hirshberg was a lot more comfortable with a paint brush in his hands than a spreadsheet. But under Hirshberg, Activision Publishing has launched some of its most successful games in history, including Call of Duty: Black Ops and Call of Duty: Modern Warfare 3. At the DICE Summit in Las Vegas, Hirshberg talked about the experiment of an advertising creative person rising to the top of one of the world’s biggest video game companies.
The marketing campaigns for those games helped them rise above hardcore gaming enthusiasts to mass audiences. Under the tag line, “there’s a soldier in all of us,” Black Ops commercials billed the game as one that any weekend warrior could play. The Modern Warfare 3 TV commercials promoted the game as playable by both veterans and newcomers, or “noobs.” These ads showed that creative marketing could elevate a game to the level of a cultural phenomenon. Modern Warfare 3 generated more than $1 billion in revenue in its first 16 days on sale, and Call of Duty had 40 million monthly active users in 2011.
Hirshberg said that, based on his background, he believes that great video games are not products. They’re brands. While people buy products, they “buy into brands,” he said. That is what Activision was counting on when it decided to launch Call of Duty Elite, a social network for hardcore Call of Duty fans. It was an attempt to keep gamers engaged in the product year round, rather than just for a few weeks a year. The tough sell was that Activision wanted to offer a premium version of Elite for the hardcore fans. The hint of the subscription fee caused a fan revolt by bloggers such as Neils Hansen (pictured on screen), of the Gunn Shop report.
After a summer of criticism, Activision threw a fan appreciation event, Call of Duty XP, where it announced the fee for the premium version of Elite would be $4.99 a month, which was a bargain considering subscribers would get free access to content such as map packs that would ordinarily cost more than $60 a year. After that, bloggers such as Hansen decided that Elite wasn’t a “douche move” after all. Call of Duty Elite got more than 7 million subscribers, including 1.5 million who paid, making it one of the fastest-growing premium subscription services ever.
We sat down and talked with Hirshberg after his DICE talk. Here’s an edited transcript of our exclusive interview.
Gamesbeat: I didn’t quite connect all the dots in the talk. What turned around bloggers like Hansen in particular? The bloggers turned around on Elite because…?
Eric Hirshberg: What I described was, the first impression we made was during the beta. We told people who there was going to be a paid subscription part of the service, but we didn’t tell them about everything you were going to get, because we didn’t want to talk about things that we couldn’t yet show. It was a no-good-options situation. What turned them around was when we got to Call of Duty XP. We got the chance to finally show Elite and all of its features working in the game, and tell everybody what they were going to get. So once he heard the whole list, it turned him around.
GB: He seemed to latch on to the value proposition.
GB: It was as if $60 for four different content drops, or $4.99 a month, and I get the maps for less money than I would otherwise spend during the year. So the value proposition is what sold him. Everybody’s going to come around to the value of that deal at some point, right? But is there also something more that you guys accomplished there, where you convinced them to go from, say, buying one product a year, to staying with it for the whole year?
EH: Well, if you rewatch the video, he did latch on to the value proposition, but he also talked about all the other services that we’re baking into Elite. It was way beyond just what other services were offering. So yeah, I think that the value of the product and the vision of the product won people over. The story was really about how we had to make this Sophie’s Choice between doing the beta and making the best possible first impression. We couldn’t do both.
GB: I guess the experience of creating the brand and promoting the experience seems to help with this message. The task you wanted to do was convert from product-only purchases to year-round engagement, I guess?
EH: As I said, I think both Call of Duty Elite and Call of Duty XP, if looked at through a certain lens, are sort of experiments with how willing people are to enter into a real relationship with a game that they like. To think of it differently than something you buy once a year, to think of it more as something you do all year round. Or do, in the case of XP, as a sort of lifestyle piece of entertainment. So I think that both of them show a greater potential than people might assume that games have, to become those kinds of brands in people’s lives.
GB: Is this a case of the games industry hasn’t come to truly realize this yet? That games are brands, that they’re not just products?
EH: I don’t know that it’s the games industry hasn’t come to realize it so much as, it’s almost very emblematic of how all entertainment industries promote their products. But as I said in my comments, games are different, because they’re not disposable, they’re not one-time. They really are relationships. The way you interact with a game has much more in common with the way you interact with a sport that you love, or a hobby that you love, that’s ongoing and long-lasting, than with how you watch a movie. Which you do for two hours and then you move on. So I think all we’re trying to do is look at that behavior and change the way we talk to people about games.
GB: It makes sense, that (game industry) people should start thinking this way, especially if they’ve figured out what their powerful properties are. That seems to explain all of Activision’s behavior for the last few years, focusing on the brands that are really the hottest.
EH: Well, not just the hottest properties. I got a lot of questions in the run-up to Skylanders: Spyro’s Adventure about why we were choosing to enter the kids category when others were exiting it. When the strength of the Wii sales were slowing down. There were a lot of reasons that, if you just looked at them on a spreadsheet, you would think that might not be a great idea. But the magic of the idea doesn’t fit on a spreadsheet. Where Activision has chosen to make the big investments and take the big risks are the places where we feel that we have something special to contribute and something that sets our game apart. In the case of Call of Duty, I think it’s the strength of the brand itself, and the strength of the developers behind it. In the case of Skylanders it was the idea of toys coming to life. In the case of Bungie, it’s the strength of that developer. In the case of Call of Duty Elite, it was the behavior of our gamers — the fact that they were sticking around all year and buying up every piece of downloadable content (DLC) we could release. We had the resources to make a really big investment, to try something new. So we definitely have a strategy not to just compete in every category, just because we don’t compete there, but to only compete where we feel like we have something special to bring to the party.
GB: And if people buy into a brand, that becomes just more valuable, and you can extract more value from it?
EH: It’s a matter of a shift in mindset. People don’t have any problem thinking about products in other sectors this way. I don’t think anyone would say that when you buy an Apple product, you’re just buying a piece of consumer electronics. You’re also buying a little bit of the Apple belief system, an emblem of your creativity, your design aesthetic. Same with Nike shoes or different soft drinks or beers. There are all kinds of brands that have meaning beyond the product in other categories. That hasn’t been historically true of games, but I think it can be, and some of the work we’ve done on Call of Duty and some of the approaches we took on Skylanders show that.
GB: Your talk was also interesting in that, traditionally, I have come to see the two sides of the game business as consisting of business people and creative people. And the creative people are the developers making the game, and they tend to have an attitude about all business people. They would lump the marketing people in with the business people. But I guess from your talk, it seems like you’re identifying with creative marketing people.
EH: Well, there’s a difference between marketing people in a corporation and people who actually write and create ads. That is pure creativity, and they’re on the hook for developing and producing the creative product that is the company’s lifeblood in a very similar way to game developers. So I think that my background is not just a marketing background, but a truly creative person’s background, and that’s been my experience my whole career. And so I bring that point of view to my new role. I don’t pretend to be a game designer. I’m not, but I certainly think I have more empathy for creative people. I have a different perspective on the games and on the creative process than someone who has a different background. And someone who has a different background would have other strengths that I don’t have. But the point of the talk was just that, in creative businesses, it might be good to consider a creative person’s point of view in leadership roles.
GB: It is also interesting. This is maybe one of these areas where Apple was really good too. Not just the creators of the products were really good, but also the people who thought about, “How do you get these products in front of people?”
EH: Yeah. I don’t know if you read the Walter Isaacson biography on Steve Jobs, but I thought it was really a fascinating dynamic described between Steve Wozniak and Jobs, where Wozniak was this engineer, knew how to build things, and Jobs was this guy who knew how to make them culturally impactful. He had that kind of nuclear imagination when he looked at the potential of a product to change behavior. It’s something I certainly admire.
GB: How did this perspective make a difference with how you looked at Skylanders?
EH: Everyone at the company realized that the idea of bringing a toy to life, and the elegance with which Toys for Bob figured out how to do it. They made it instantaneous, very satisfying, swappable from character to character in a very seamless way. That was a huge idea, and that was new and differentiating and transcended any other analysis of the product or the category. I don’t think there would be any way to have predicted that a new intellectual property in the kids sector could have that kind of performance, but it was the X factor of that magical idea. And so that was differentiating, and that gave the company the boldness it took to make all those extra investments that I talked about, and to make it a much bigger and much riskier proposition. Because everyone believed that, if we got it right, it could become a really meaningful franchise for us.
GB: Skylanders sold than 20 million toys, right?
EH: Yeah. More than 20 million toys total. What they noted was if you took the toys into account, it would be the tenth-biggest game of 2011.
GB: But you didn’t talk about unit numbers. Any particular reason for not just saying what the units are?
Activision PR: We don’t ever really talk about units on any of our calls. Just dollars typically. So I don’t think it was a specific omission. But I mean, the data’s out there if you want to find it.
GB: Okay. I’m just curious, because I guess Call of Duty beat the record, right? It seems like more units then.
EH: Yeah. It was the biggest game in a single year, ever.
GB: So these hit, I guess, then, the high end of what you expected? Both Call of Duty and Skylanders?
EH: They both exceeded our projections. So obviously we’re pleased with that.
GB: For 2012, what is your encore? You’ve got Skylanders: Giants coming?
EH: Earlier this week we went to Toy Fair, we went to New York before Toy Fair and revealed the next chapter in Skylanders, which is Skylanders: Giants. The game is looking just incredible. The simple shift of super-sizing the characters leads to all these new gameplay mechanics and powers and strategies within the game. The way Toys for Bob is designing it is so cool, because you would think, oh, these are just invincible Skylanders, but they’re not, they can’t do things that the little guys can do, and they can do things that the little guys can’t do, so it adds a whole new layer to the strategy of what character you choose at what time within the game. The character design is looking incredible, the game itself is looking really fun. As you heard on the earnings call yesterday, the toys seem to evaporate the day they arrive on store shelves. It’s a great thing. We’ve got a hit on our hands in both the video game space and the toy space, with one property. We really want to keep bringing new, cool ideas to kids.
GB: The XP event sounds like it really paid off.
EH: It was definitely a big gamble and we definitely got a good return on our investment. We went all in. It was not a small vision or undertaking. But as you saw, we got some pretty incredible return on investment in terms of media impressions and PR impressions and social media engagement.
GB: So is it a given, then, you’d do Call of Duty XP every year, or every time a Call of Duty game launches?
EH: Haven’t announced that yet. [laughter] Sorry. I hate that answer as much as you do.
GB: It is interesting to me, the whole change in thinking that has happened around these big titles. It seems to go hand in hand with all the other stuff that’s happening in the game industry. You can’t just do things the old way.
EH: I think that there’s a lot of hand-wringing in the industry about fewer and fewer titles being able to deliver that high-level performance. But I look at it through a different lens. Those fewer titles are generating more engagement and more willingness to buy additional content and more willingness to stick with a game than ever before. Games have always been a less disposable medium than other forms of entertainment, and they’ve become exponentially less disposable, because people are showing this desire to go deeper and deeper into the worlds that they love. There’s no other medium that can deliver that hundreds and hundreds of hours of engagement. And so I think that’s a big opportunity. It’s a shift in mindset, because it leads you to invest more and create more innovation within the pillars of the franchise, as opposed to creating more of a grazing experience for people, with lots of different titles. But I don’t think that means that there can’t be just as much, if not more innovation within particular games.
GB: I cover chips as well, and these analog chip-makers talk about getting designed into something. And then once they get designed into something it’s like one- or two-dollar chips for each product. You can design into something for like 15 years because nobody wants to redesign something so trivial. They just make a decision, they get it from a vendor, and the vendor makes that product for 15 years. So this kinda makes me think that you can try and get your games designed into a user’s mind. This user is always going to play this game.
EH: I do think that games have much more in common with sports teams we love and follow, or hobbies that we love and follow, than it does with other forms of entertainment. There’s at least the possibility that games can become a much more constant part of your life.
GB: Once you get them, you’ve got them for life. But it’s yours to lose.
EH: You have to continually keep delivering engagement and new things for them to do, or you will lose them.